Page 2228 - Week 07 - Thursday, 23 June 2005
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So the concept of employee share ownership is a good one and it is commendable that the Australian government, through their tax arrangements, apply special treatment to try to encourage employers to extend that level of ownership to their employees. The commonwealth government’s target Australia-wide for employees with shares in their company is 11 per cent by 2009.
It is a little unfortunate, therefore, that, contrary to the commonwealth’s policy, the ACT government clearly does not share the same level of enthusiasm for this concept and is extending the reach of payroll tax to include the value of contributions to employee share acquisition schemes. The government’s main reason for doing that is to protect the payroll tax base from further erosion as employee share schemes become progressively more popular. I suggest, however, that probably the main priority in this matter is the protection of revenue, which is obviously a real concern for the Treasurer in the current climate with the expenditure pattern of his colleagues.
Payroll tax in the ACT is expected to raise about $213 million, I understand, in 2005-06. In the previous fiscal year—that is, the 2004-05 year that we are concluding—the figure to be raised is expected to be $197.7 million. This largely reflects the forecast growth in economic activity and therefore employment. There is no estimate available presently of the possible revenue to be achieved from expanding the scope of payroll tax to include employee share schemes, but according to the Treasurer the value of the employee schemes which could be subject to payroll tax is estimated to be around $2 million to $3 million per annum. If that is correct, the value of additional payroll tax collections would be only around about $200,000—or a little higher in our estimation. Of course, that can be calculated by applying the rate to $3 million in income.
As I indicated, we believe in simplification in taxation. We do not as an opposition favour loopholes and anomalies being available to be exploited. But, at the same time, we certainly are of the view that taxation should not be an unnecessary burden. For some time—long before being in this place—I have been troubled that payroll tax, which has been applied by governments of all persuasions, is a very easy slug on those who create most of the jobs in our community.
I would be impressed—I would probably see this more as a token of good will than amounting to an enormous amount in terms of revenue—if this legislation were amended so as to create a revenue neutral outcome in projected terms. In other words, it should not be about generating more tax so much as tidying up the present arrangements and ensuring that the effective burden on the community at large does not increase. But there is no suggestion that that will happen.
I think that payroll tax has been an area that has been fairly aggressively pursued by state governments around Australia. I think most employers question the merits of this tax. It would be nice to see the government find other ways of getting its revenue that are less damaging to potential employment because the cost is compounded when you add on workers compensation, payroll tax, superannuation and the like. The task of employing a person in this territory in larger establishments is obviously not a cheap undertaking and it is certainly not simply confined to the matter of their wages.
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